Angelica Reports Improved Second Quarter and First Half Results of Continuing Operations Before...

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ST. LOUIS--(BUSINESS WIRE)--Aug. 15, 2002

Angelica Corporation (NYSE:AGL) announced today improved second quarter and first half results of continuing operations before an extraordinary item related to debt

refinancing and excluding results of discontinued operations. Per share earnings for continuing operations before extraordinary item were $.38 ($.37 fully diluted) in the second quarter ended July 27, 2002 compared with $.08 last year, an increase of 375.0 percent, and were $.64 ($.63 fully diluted) for the first half of this year compared with $.24 last year, an increase of 162.5 percent. Second quarter and first half sales and revenues as well as operating earnings improved over last year in both of the continuing business segments, Textile Services and Life Retail Stores.

Combined sales and revenues of continuing operations were $88,526,000 in the second quarter compared with $85,359,000 in the same period last year, an increase of 3.7 percent. Income from continuing operations before extraordinary item was $3,268,000 versus $687,000 in the second quarter last year. For the first half of the year, combined sales and revenues of continuing operations increased 4.1 percent to $181,783,000 compared with $174,546,000 last year. First half income from continuing operations before extraordinary item increased to $5,561,000 from $2,086,000 in the same period last year.

The extraordinary item in the second quarter this year reflected the prepayment penalty paid to previous lenders at the end of May as a part of the complete refinancing of the Company's debt following the sale of the Manufacturing and Marketing segment. Including the extraordinary item, which amounted to a loss of $.51 per share ($.50 fully diluted), results of continuing operations for the second quarter and first half this year were a loss of $.13 per share and income of $.13 per share, respectively.

Second quarter results of discontinued operations, which reflect differences between current and prior estimates of the loss on sale and discontinuation of the Manufacturing and Marketing segment, were a loss after tax of $961,000 or $.11 per share. In last year's second quarter, discontinued operations had net income of $208,000 (before application of any portion of the Company's interest expense). Combining continuing and discontinued operations and the extraordinary item, the Company in total had a net loss of $.24 per share in the second quarter this year compared with net income of $.10 per share in the second quarter last year; and a net loss of $.49 per share in the first half compared with net income of $.27 per share in the same period last year.

In the Textile Services segment, second quarter revenues increased 3.4 percent to $66,795,000 compared with $64,585,000 in last year's second quarter. For the first half of this year, revenues were up 4.1 percent. Revenues continue to benefit from excellent increases posted last year in net new business (annualized revenues from new business installed less lost business) plus an additional $7,000,000 of net new business added in the first half this year. Operating earnings increased 34.1 percent in the second quarter to $6,478,000 versus $4,831,000 in the same period last year as a result of higher revenues and continued good results in efforts to control linen expense, increase plant productivity and lower production costs. Second quarter revenues were reduced by about $600,000 or 0.9 percent by the sale during the period of the segment's underperforming Denver, Colorado plant, but operating earnings benefited from a $500,000 gain on the sale.

Textile Services has broken ground on a $10,500,000 state-of-the-art plant in Phoenix, Arizona which is expected to be completed in the spring of 2003. Also, a proposed exchange of Textile Services' Philadelphia, Pennsylvania plant for a competitor's (Tartan Textile) Vallejo, California plant was recently announced. It is expected that this transaction, which will strengthen Textile Services' position in the important California market, will be completed in the next few months. Textile Services also continues to negotiate for the acquisition of a smaller plant in the southeastern U.S. and to examine other acquisition opportunities.

At Life Retail Stores, the improved results seen in the first quarter this year continued in the second quarter. Sales for the second quarter increased 4.6 percent to $21,731,000 compared with $20,774,000 last year despite the planned reduction in the number of stores from 287 to 264. The second quarter sales loss from these closed stores approximated $1,200,000 or 5.2 percent. Operating earnings were $151,000 in the second quarter compared with a loss of $712,000 in the same period last year. The same-store sales gain in the quarter was a strong 6.7 percent, which brought the same-store gain for the first half of the year to 4.3 percent compared with a negative 2.1 percent in the same period last year. Catalogue and e-commerce sales continue to grow and to be significantly above levels last year.

Don W. Hubble, Chairman, President and Chief Executive Officer of Angelica said, "I am encouraged by the continuation in the second quarter of the improvements we saw in the first quarter in both the top line and operating earnings for each of our continuing business segments." He went on to say, "With these results, we should exceed our previous earnings forecast range, but given that the economic recovery still appears somewhat uncertain, I am hesitant to increase our forecast beyond a broad range of $1.00 to $1.10 per share for the full year for continuing operations before extraordinary item. We will reassess that estimate again at the end of the third quarter."

Angelica Corporation, traded on the New York Stock Exchange under the symbol AGL, provides textile rental and laundry services to healthcare institutions, and operates a national chain of retail healthcare uniform and shoe stores with a fully-integrated catalogue and e-commerce operation.

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